Viacom Has Dropped Out of Bidding for Scripps Networks

By Amol Sharma and Sarah Rabil

Viacom Inc. is out of the bidding to acquire Scripps Networks Interactive Inc., leaving Discovery Communications Inc. as the remaining potential buyer in the running, people familiar with the situation said.

Viacom, owner of cable TV networks including MTV and Comedy Central, saw promise in combining its youth-skewing networks with Scripps channels like HGTV and Food Network that specialize in nonfiction and lifestyle programming.

But the media company faced financial constraints and didn’t want to overpay for the asset, one of the people familiar with the situation said. Scripps has a market value of almost $11 billion.

After reviewing bids from both companies, Scripps determined it would prefer to negotiate exclusively with Discovery, the people familiar with the situation said.

A deal would have been a significant pivot by Viacom’s relatively new chief executive, Bob Bakish, who in his first months on the job has been focused on stabilizing the company’s balance sheet, turning around film operations and emphasizing a set of core cable networks.

Doubling down on the cable TV business would be been viewed as a surprising move by many on Wall Street.

Viacom had more than $12 billion in debt as of March 31 and is clinging to the lowest-level of investment-grade credit rating, according to Moody’s Investors Service, meaning that a deal involving a substantial amount of cash would have risked a downgrade to junk.

Write to Amol Sharma at amol.sharma@wsj.com and Sarah Rabil at
Sarah.Rabil@wsj.com

Breaking the story

Amol Sharma and Sarah Rabil were first to report that Viacom Inc. was out of the bidding to acquire Scripps Networks Interactive Inc., leaving Discovery Communications Inc. as the remaining potential buyer in the running. According to sources, Viacom faced financial constraints and didn’t want to overpay for the asset.

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